Justia Energy, Oil & Gas Law Opinion Summaries

Panoche, a producer of electricity, and Pacific Gas and Electric Company (PG&E), a utility that purchases its electricity, disputed which of them should bear the costs of complying with a legislatively-mandated program to reduce greenhouse gas emissions pursuant to the Global Warming Solutions Act (Assem. Bill 32 (2005–2006 Reg. Sess.). PG&E invoked the arbitration clause in its agreement with Panoche. Panoche resisted arbitration, arguing that the controversy was not ripe for resolution because ongoing regulatory proceedings at the California Air Resources Board and the California Public Utilities Commission would at least provide guidance in the arbitration and could render the proceeding unnecessary. The arbitration panel denied Panoche’s motion, and after a hearing determined that Panoche had assumed the cost of implementing AB 32 under the agreement and understood that at the time of signing. The arbitrators also concluded that the parties “provide[ed] for recovery of GHG costs” by Panoche through a “payment mechanism” in the agreement. The trial court agreed with Panoche, ruled that the arbitration was premature, and vacated the award. The court of appeal reversed and ordered confirmation of the award. Panoche identified no procedural disadvantage it suffered in going forward with the arbitration as scheduled and failed to meet the “sufficient cause” prong under Code of Civil Procedure 1286.2(a)(5). View "Panoche Energy Ctr. v. Pac. Gas & Elec." on Justia Law

Dominion obtained necessary certificates for transmission lines to connect Dominion’s recently-approved Wise County power plant with an existing Russell County substation. In 2008, Dominion offered Hylton $19,100 to purchase a 7.88-acre easement. Hylton owned 354 acres across 20 contiguous and two non-contiguous tracts. He owned the surface and mineral rights of some tracts and only the mineral rights of others. Dominion included an appraisal, acknowledging that, according to Hylton, two major coal seams run through or near the property and that Hylton’s ability to sell or lease those mineral rights might be damaged. The appraisal did not consider mineral rights in determining fair market value. The parties signed an agreement granting Dominion the right to enter and construct the transmission line. Dominion filed its petition for condemnation, limited to the surface use of Hylton’s property and moved to prohibit Hylton from presenting evidence of “the separate value of coal,” damage to tracts not taken, and “damages for duplicative or inconsistent claims.” Hylton later moved to dismiss, arguing that Dominion’s pre-petition offer to purchase was not a bona fide offer, under Code 25.1-204, so that Dominion had failed to meet jurisdictional requirements for condemnation. The trial court dismissed and awarded Hylton attorneys’ fees. The Supreme Court of Virginia reversed the dismissal and the denial of Dominion’s motion in limine with regard to evidence related to the separate value of the coal and the potential surface mine. Because the issue of whether the unity of lands doctrine applies with respect to neighboring lands, not part of the taking, is a question of fact, denying the motion on that issue was appropriate. View "Va. Elec. & Power Co. v. Hylton" on Justia Law

The PSC approved the recovery of FPL's costs incurred through its joint venture with an oil and natural gas company to engage in the acquisition, exploration, drilling, and development of natural gas wells in Oklahoma. The court agreed with appellants that the PSC lacks the authority to allow FPL to recover the capital investment and operations costs of its partnership in the Woodford gas reserves through the rates it charges consumers. Because the PSC exceeded its statutory authority when approving recovery of FPL’s costs and investment in the Woodford Project, the court reversed the judgment. View "Citizens of the State of Florida v. Art Graham, etc." on Justia Law

FutureGen was created to research and develop near-zero emissions coal technology and sought to use carbon capture and storage to develop the world’s first near-zero emissions coal power plant. The proposed retrofitted “clean coal” electric energy generating facility, known as “FutureGen 2.0,” was to be located in Meredosia, Illinois, and scheduled to begin operating in 2017. To secure private investment for FutureGen 2.0, the Illinois Commerce Commission issued an order finding that it has the authority to force public utility companies and smaller, privately owned and competitively operated Area Retail Electric Suppliers (ARES) to purchase all of FutureGen 2.0’s electrical output over a 20-year term. The appellate court affirmed the order. In 2015, while appeal was pending, the U.S. Department of Energy suspended funding for the FutureGen 2.0 project. The FutureGen Alliance board of directors approved a resolution in January 2016 ceasing all FutureGen 2.0 project development efforts and indicated its intention to terminate the sourcing agreements. The Illinois Supreme Court dismissed the appeal as moot, vacating the decision of the appellate court. View "Commonwealth Edison Co. v. Ill. Commerce Comm'n" on Justia Law

The Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over interstate wholesale electricity sales. States regulate retail sales. In states that have deregulated their energy markets, “load serving entities” (LSEs) purchase wholesale electricity from generators for delivery to retail consumers. PJM, which manages segments of the electricity grid, operates an auction to identify need for new generation and to accommodate long-term contracts. PJM predicts demand for three years and assigns a share of that demand to each participating LSE. Producers enter bids. PJM accepts bids until it purchases enough capacity to satisfy anticipated demand. All accepted sellers receive the highest accepted rate (clearing price). LSEs then must purchase, from PJM, electricity to satisfy their assigned share. FERC regulates the auction to ensure a reasonable clearing price. Concerned that the auction was not encouraging development of sufficient new in-state generation, Maryland enacted a program, selected CPV to construct a new power plant and required LSEs to enter into 20-year contracts with CPV. Under the contract, CPV sells its capacity to PJM through the auction, but—through mandated payments from LSEs—receives the state price rather than the clearing price. The district court issued a declaratory judgment holding that Maryland’s program improperly sets CPV's rate for interstate wholesale capacity sales to PJM. The Fourth Circuit and Supreme Court affirmed. Maryland’s program is preempted because it disregards the rate FERC requires under its exclusive authority over interstate wholesale sales, 16 U.S.C. 824(b)(1). FERC has approved PJM’s capacity auction as the sole rate-setting mechanism for those sales. Maryland attempts to guarantee CPV a rate distinct from the clearing price, contrary to the Federal Power Act’s division of authority; states may not seek to achieve ends, however legitimate, through regulatory means that intrude on FERC’s authority. View "Hughes v. Talen Energy Mktg., LLC" on Justia Law

MISO, a regional association, monitors and manages the electricity transmission grid in several midwestern and southern states, plus Manitoba, Canada, balancing the load, setting competitive prices for transmission services, and planning and supervising expansion of the system. Until 2011, if MISO decided that another transmission facility was needed in the region, the MISO member that served the area in which the facility would be built had the right of first refusal to build it, pursuant to the contract among the MISO members. Federal Energy Regulatory Commission (FERC) Order No. 1000 required transmission providers to participate in regional transmission planning to identify worthwhile projects, and to allocate the costs of the projects to the parts of the region that would benefit the most from the projects. To facilitate its implementation, the order directed providers “to remove provisions from [FERC] jurisdictional tariffs and agreements that grant incumbent transmission providers a federal right of first refusal to construct transmission facilities selected in a regional transmission plan for purposes of cost allocation.” FERC believed that competition would result in lower rates to consumers of electricity. The Seventh Circuit denied petitions for review of the order. The electric companies did not show that the right of first refusal was in the public interest View "MISO Transmission Owners v. Fed. Energy Regulatory Comm'n" on Justia Law

The Nuclear Waste Policy Act of 1982 authorized the Department of Energy (DOE) to contract with power utilities for a planned national nuclear waste disposal system, 42 U.S.C. 10222. Utilities were to pay into a Nuclear Waste Fund; the government was to dispose of their spent nuclear fuel beginning by January 31, 1998.. Under the Standard Contract, utilities must provide “preparation, packaging, required inspections, and loading activities necessary for the transportation … to the DOE facility.” DOE is responsible for “arrang[ing] for, and provid[ing], a cask(s) and all necessary transportation … to the DOE facility.” In 1983, System Fuels entered Standard Contracts concerning the Grand Gulf and Arkansas Nuclear One power stations. The government has yet to begin accepting spent nuclear fuel. System Fuels obtained damages for costs incurred through August 31, 2005 (Grand) and June 30, 2006 (Arkansas), including costs to construct Independent Spent Fuel Storage Installations (ISFSIs) and later successfully sought damages for continued breach. The Claims Court denied costs incurred to load spent fuel into storage casks at the ISFSIs by first loading it into canisters, then loading those canisters into dry fuel storage casks and welding the casks closed. The Federal Circuit reversed, noting that under the Standard Contracts, DOE cannot accept any of the canistered fuel as is, so System Fuels will incur costs to unload the casks and canisters and to reload fuel into transportation casks if and when DOE performs. View "System Fuels, Inc. v. United States" on Justia Law

Capital Electric Cooperative, Inc. appealed a judgment affirming a Public Service Commission order granting Montana-Dakota Utilities Company ("MDU") a certificate of public convenience and necessity to extend its electric service in Burleigh County. Because the Commission's order was in accordance with the law, its findings of fact were supported by a preponderance of the evidence and sufficiently addressed the evidence presented, and those findings supported the conclusions of law, the North Dakota Supreme Court affirmed the judgment. View "Capital Electric Cooperative, Inc. v. N.D. Public Service Commission" on Justia Law

Section 205 of the Federal Power Act (FPA), 16 U.S.C. 824d(a), mandates that all rates and charges demanded, or received by any public utility for the transmission or sale of electric energy subject to the jurisdiction of the Commission shall be just and reasonable. Xcel petitioned for review of three of the Commission's orders denying a retroactive refund for unlawful rates. As a preliminary matter, the court concluded that, to the extent the Commission denied Xcel relief because it lacks authority to order refunds from Tri-County, a non-jurisdictional entity, this was not responsive to Xcel’s request. On the merits, the court concluded that the Commission’s reliance on section 2.4(a) of its regulations and related cases to deny Xcel retroactive relief is misplaced. Because the Commission’s reliance on section 2.4(a) of its regulations as applied in its precedent is inapposite, and its position that its section 205 error of law is irremediable beyond prospective relief under section 206 appears irreconcilable with the authority Congress granted it in section 309 to remedy its errors, the court granted the petition in part and remanded the case to the Commission for appropriate action. View "Xcel Energy Servs. Inc. v. FERC" on Justia Law

Until 1997, Illinois residents could only purchase power from the local public utility, whose rates were regulated by the Commerce Commission (ICC). The 1997 Electric Service Customer Choice and Rate Relief Law allows residents to buy electricity from their local public utility, another utility, or an Alternative Retail Electric Supplier (ARES). The ICC was not given rate-making authority over ARESs, but was given certain oversight responsibilities, 220 ILCS 5/16-115. The Law did not explicitly provide a mechanism for recovering damages from an ARES related to the rates. In 2012, Zahn began purchasing electricity from NAPG, after receiving an offer of a “New Customer Rate” of $.0499 per kilowatt hour in her first month of service, followed by a “market-based variable rate.” Zahn never received NAPG’s “New Customer Rate.” NAPG charged her $.0599 per kilowatt hour for the first two months, followed by a rate higher than Zahn’s local public utility charged. Zahn filed a class-action complaint, claiming violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and unjust enrichment. The court dismissed for lack of subject-matter jurisdiction, or for failure to state a claim. The Seventh Circuit certified, to the Illinois Supreme Court, the question of whether the ICC has exclusive jurisdiction to hear Zahn’s claims, noting that Illinois appellate courts are in conflict. View "Zahn v. N. Am. Power & Gas, LLC" on Justia Law